Question

Check my work Exercise 15-15 Factory overhead computed, applied, and adjusted LO P3, P4 points In December 2016, Custom Mfg. established its predetermined overhead rate for jobs produced during 2017 by using the following cost predictions: overhead costs, $700,000, and direct materials costs, $500,000. At year-end 2017, the company's records show that actual overhead costs for the year are $707,100. Actual direct material cost had been assigned to jobs as follows. eBook Hint Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost $360,000 81.000 57.000 $490.000 AK References 1. Determine the predetermined overhead rate for 2017 2&3. Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied. 4. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.

Answer 1

1
Overhead Rate
Estimated overhead costs	Estimated direct labor costs	Overhead rate
700000	500000	140%
		700000/500000*100
2&3
Factory Overhead
Actual Overhead	707100
Applied overhead	697200	(498000*140%)
Under applied overhead	9900	(707100-9900)
4
Date	General Journal	Debit	Credit
31-Dec	Cost of goods sold	9900
	Factory Overhead		9900